Correlation Between GM and Santierul Naval

Can any of the company-specific risk be diversified away by investing in both GM and Santierul Naval at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GM and Santierul Naval into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between General Motors and Santierul Naval Orsova, you can compare the effects of market volatilities on GM and Santierul Naval and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GM with a short position of Santierul Naval. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Santierul Naval.

Diversification Opportunities for GM and Santierul Naval

0.85

Correlation Coefficient

GM  Santierul Naval

Very poor diversification

The 3 months correlation between GM and Santierul is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Santierul Naval Orsova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santierul Naval Orsova and GM is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on General Motors are associated (or correlated) with Santierul Naval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santierul Naval Orsova has no effect on the direction of GM i.e., GM and Santierul Naval go up and down completely randomly.

Pair Corralation between GM and Santierul Naval

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Santierul Naval. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 1.5 times less risky than Santierul Naval. The stock trades about -0.07 of its potential returns per unit of risk. The Santierul Naval Orsova is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  730.00  in Santierul Naval Orsova on September 27, 2024 and sell it today you would lose (15.00) from holding Santierul Naval Orsova or give up 2.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

General Motors  vs.  Santierul Naval Orsova

General Motors

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.

Santierul Naval Orsova

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Santierul Naval Orsova are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Santierul Naval may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GM and Santierul Naval

The main advantage of trading using opposite GM and Santierul Naval positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Santierul Naval can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Santierul Naval will offset losses from the drop in Santierul Naval's long position.

The idea behind General Motors and Santierul Naval Orsova pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Share Portfolio module to track or share privately all of your investments from the convenience of any device.